Solution-What is the contribution margin in rm

What is the contribution margin in rm

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Reference no: EM133121154

Question - Kerusi Sdn Bhd manufactures 2 types of chairs: Type A (without arm-rest) or to process further into Type B (with arm-rest). You are furnished with the following information for the year 2022:

Detail	Type A	Type B
Market demand (Units)	20,000	10,000
Kerusi's production capacity (Units)	15,000
Current sales (Units)	12,000	3,000
Selling Price (RM/unit)	80	120
Direct material (RM/unit)	30	40
Direct labour (RM/unit)	20	30
Variable overhead (RM/unit)	10	20
Fixed overhead (RM)	220,000

Required -

1. What is the contribution margin in RM and in percentage for Type A and Type B respectively? Should Kerusi produce and sell the chairs as Type A, or process further and sell as Type B?

2. Calculate the profit for 2022.

3. How many units of Type A and Type B should Kerusi produce to maximise its profit? What will be the profit for 2022 if your proposal was adopted? Support your answer with appropriate calculation.

4. Calculate the breakeven point in unit and RM for the company as a whole given the current level of sales with 12,000 units of Type A and 3,000 units of Type B.

5. Discuss the qualitative considerations that Kerusi need to take into account before finalising its decision.

Reference no: EM133121154

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What is the contribution margin in rm

Reference no: EM133121154

Reference no: EM133121154

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